welcome back. let's get back to andrew in davos. you make a lot of money, too, andrew, when you think about it. >> when you think about it. possibly too much. i might do the job for less. i never thought i'd -- >> what happened to justin timberlake? >> shan parker, he bailed on us. it's almost 3:00 in the afternoon. he's got another party he's hosting tonight in davos. he's flying john legend over to play at the party tonight. i'll try to get a camera in there so we can show some pictures on monday. it's been a great week. optimistic tone here. i should say thank you to everybody, to the huge production crew, they did an awesome, awesome job. thank you, guys.

guess who's here. >> that's jim cantore. >> this is jim cantore, mr. weather man himself. he's got the whole thing, thank you. you did very well. >> thank you very much. so did you. >> he told me it was going to be very hard to make snow balls in this weather, right? >> i did. >> andrew -- >> too dry. >> andrew, we can't wait to see you back here. have a safe trip back. that does it for us. "squawk on the street" starts right now. >> appreciate it. good friday morning. welcome to "squawk on the street." i'm melissa lee, with jim cramer and carl quintanilla and david faber. how are we poised to start the friday morning session. right at the open, the s&p 500

looking to add to five-year highs at this point. looking at about six points. as for europe, gdp figures in the uk nearing a triple-dip recession. capping off a big week for the nikkei, up almost 3% for the week. our road map this morning, dow taking aim at a new record high on track for the best january since 1997. the s&p also poised for its longest winning streak since november 5th, 2004, as it sits at five-year highs. microsoft confirming unspectacular launch for windows 8 and declines in office software. will microsoft go the way of the dying pc. starbucks shares get a jolt this morning on earns. samsung posted record profits but show signs that maybe the smartphone slowdown is not an apple problem.

apple slightly higher after closing down 12% yesterday. futures moving higher as the dow looks at a march toward record territory. posted gains for the tenth time in the last 11 sessions. also, the s&p 500 surpassing the 1,500 mark for the first time since december 2007, but closed below that level with a slight gain on the session. certainly it seems like it's all positive. the dow transports confirming this move higher. it was pointed out in a note a couple of days ago that that's the buy signal here on the dow. yesterday's market action, jim, was that concerning that it couldn't hold 1,500? >> i'm not going to be concerned about where they nailed it at the close. the earnings per share have just been stellar. not just the bottom one. the outline's been great.

procter & gamble this morning, and i was on the starbucks call. they're firing on every single cylinder, delivering on all promises, 3m, big dow stocks, they're talking about the big turn in asia. asia turn, asia turn, asia turn. i'm hearing it in every single call. china back. europe. i've not heard anyone say -- stabilizing europe. there's many good things that are happening. and yet you can't fight it. you can't fight this tape. >> it hasn't been uniform, though, of course, right? dupont, off the top of my head. the outlook is not crystal clear go. >> they looked at the december month. there are people who are critical of me saying, parker was much better. coleman did say big second half turn. with big business in asia there. they've got housing business. so yes, holman did not deliver

that much. but it wasn't as bad. now, carl, it is quintessentially a bearish argument that they have some saying, this companies all guided down and beat. at the same time, auto's coming back, china's coming back, europe's coming back. we may have to say, things aren't that bad. i know everyone's reluctant to do that. >> investors haven't been that reluctant to believe that's possible. although i think there's this debate amongst long-term investors with, okay, i remember days we went two years without a major shock, so to speak. but that has not been the case over the last series of years. seems the first quarter gets our hopes and dreams going, only to be -- >> that's a very good point. >> only to crumble on the rocks of the -- >> but draghi had a press conference this morning at 4:30 that was about as fab house as i have heard a central banker speak. europe's going up.

i said, look, they're going to get it together in the second half. he said the second half is going to be good. >> if you believe we're not going to have any shocks this year, you clearly would want to buy this market. >> the stock market is not expensive. it's not expensive. microsoft is the same price. >> ten years, yeah. >> here's the front of the "usa today" money section today, all the arguments why investors are getting back in. wilshire has recovered its losses, coincidentally. vix is down, flows going in the right direction. are you telling the retail -- are you telling mom and pop now's the time? >> i don't think they should ever have left. i still think there's movement. starbucks is where it was before the big swoon with china, wasn't going to do that well, and it's come back. starbucks isn't that expensive. procter & gamble, they're finally getting it together.

that stock has done nothing. 3m has really done not that much. cisco this morning announces the sale of wingsis. they wanted to be in the home market. not done that much. the there's a lot of stocks that have not done that much. >> not google, but a number of the other ones you mentioned have not had significant top line growth for some time. >> it's just that i think things are better. should people come in now? i wish they had come in earlier, but i don't think that interest rates afford you a great opportunity. i. >> the people talking about a bond, real bond crash as a possibility. >> the breakout continues. >> what would happen there, if we saw 94, 240 basis point increase. could you imagine? that would be -- all those concerns we've had about duration risk would come to

pass. >> at&t's got a good yield. verizon, not that bad. kimberly reported a terrific quarter. there's just a lot to like. what can i tell you, a lot it like. versus apple being this tremendous source of funds for a lot of other stocks. >> microsoft seeing its shares fall in the pre-market. the software giant reported quarterly earnings that beat forecast, but revenues shy of what analysts had been expecting with the windows 8 getting off to an unspen tactacular start. >> this was one -- usually around 930. i don't want to have a jolt, or a monster beverage. >> i don't think you should ever be allowed to have one of those. >> that conference call -- i mean, you had to someone everything you could. i always wanted to say, give me some of that. now, there is a very funny situation. there's this internet explorer ad, and the ad is about the

'90s. it said, you grew up, so did we. no, they didn't. they're stuck in the '90s. good luck to you. >> speaking of which, bill gates in davos with maria bartiromo had an interesting exchange here. take a listen. >> got a lot of good people working for him. you know, tech leaders, those are hard jobs. >> microsoft has not had an easy time recently. would you ever return to the ceo office? >> i'm engaged as a chairman on a part-time basis. but my full-time work for the rest of my life will be the foundation work. >> not an outright no, i guess. >> well -- >> hmm. i don't know. look, intel has the same problems. i always do that. people say, jim, why don't you just come out and say bomber hasn't done a good job. >> jim, why don't you just come

out and say bomber hasn't done a good job. >> you like the man, but not the stock, is that safe to say? >> that's it. >> great guy. >> he pulled out this phone. i had never seen anything like it. it had a microsoft operating system. >> he has compromising pictures of you from college, is that it? >> we used to play cards a lot. i beat the heck out of him. he always had a shoe box full of coins. >> that's what he told carl. >> that's fine. that's called revisionist history. >> one interesting thing as we dissect that report today, david will be discussing what their strategy is regarding dell. >> no comment on that on the conference call, by the way. >> listen, this is all -- dell is all still moving forward. you know, as our reporter said earlier this week, in the not too distant future. a few things to quickly point out on dell that may have missed

in my reporting from a week or so ago. dell has been going through a process for quite some time to enhance shareholder value. it started last summer when they engaged with banks that start to explore, should we split the company, is there a possibility there. are there any strategics that would be out there that might be interested. then they ended up with this plan to pursue the leverage buyout. so when we do see an announcement as we still likely are to with this leverage buyout, and others say there's a conflicted process that we don't like, that perhaps we'll start with the price, they're going to present a lot of what they've already done. the special committee will have already presented what they've already considered, and why that price is the best that they can do. that's at least something to keep in mind. >> jim, microsoft makes some sort of investment in some sort of way in dell. props up the pc business, props up the potential end user and customer core windows 8. does that make you more or less

bullish on microsoft? >> i need an earnings momentum. they have the new statistic the number of minutes that people are on skype. skype's free. it's not charging so it's not a lot of money. windows 8, didn't hear anything at all. with the consumers coming in and starting to buy it, even if we watch football games, it's endless saturation bombing of windows 8 ads. >> the pop-up stores as well, where consumers can actually go in and try? this is an ambitious endeavor. consumers don't want to wait anymore. the next catalyst could be office 2013, but they're moving to a subscription based model. that introduces a whole other level of risk into the business model. wet don't know how that's going to pan out in terms of subscription sales. >> i think the stock is kind of like sherwin williams, it's just a -- sherwin williams has been red hot, by the way.

that was no sleight to sherwin williams. >> you were talking more about the paint drying. >> more of an analogy than sherwin williams. greenburg said it's not going there. he had critical comments. but i believe microsoft is another stock that's just -- it's like your parents' stock. >> microsoft wishes it were sherwin williams. >> sherwin williams is a kids' stock, i guess. honestly, listen to that conference call. everyone knows i have a hard time sleeping. i've taken zzz, the over-the-counter -- i have found it. i'm going to put that microsoft conference call next to -- every time i can't sleep, i'm going to pick that up. >> they have the sound machines with the ocean noise, the microsoft call. >> the microsoft conference call. but that is it. i know that mcdonald has been

heightening the zzz product, their sleep products. microsoft ought to add another line of business. >> it would do well. >> lunesoft. >> quickly touch on starbucks. those shares are rising pre-market. posting a 13% jump in quarterly profits. revenues beat forecasts. global same-store sales jumped 6% helped by strength in the u.s. and china/asia/pacific region. i think it was a real relief because of what we heard from the other companies doing business in that part of the world. >> so much to like in that conference call. china, two-year constant. three-year comps, mid-60s. moving into an incredible number of cities. at the same time they're doing the operating margin expanding. you've got a crimping operating market. four cities they're kicking butt

in, st. petersburg, moscow, beijing and ho chi minh city. >> they'd probably be drinking a skim latte -- >> they would. >> i could see lenin getting off the finland station and going right into a starbucks. >> give that little latte mustache on his goatee. >> i think that was -- obviously they've got the tea -- maybe they'll have corner stores, talking about that, holiday gifts. one out of ten americans got one of these things. one out of ten. that's starting to be walmart-like. this may be the age of starbucks. >> i get it from the guy outside. >> for 1.25 snds. >> $1.50. >> inflation. >> i love paying $5.04. howard, of course, talking --

shouting out to a lot of the association. he came on and said europe is going to tirn. europe is turning. >> yep. >> i just think even the steel card sold out. >> i know. within days. within days. >> it was a good quarter. meantime, one day after a 12% drop in its stock, apple has concerns about smartphones slowdown. david niederauer here from davos. what's the game plan now. take one more look at futures as we close out this incredible week. more upside implied at the open. "squawk on the street" is back in a minute. with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies...

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smart carmakers in the spotlight this morning. sam sum said earnings rose 26% to a record high. as profits in the mobile division more than doubled. the company says it is keeping capital spending for the current year at 2012 levels as the smartphone market slows. concerns about demand is one of the issues pressure apple, after yesterday's 12% drop. shares are research in motion continue to climb ahead of the company's blackberry 10 launch scheduled for wednesday. r.i.m. soaring by a whopping 170% in the past six months. we highlight samsung in trade

here, because they saw what apple saw in the quarter that got us all concerned about apple. that is, the declines in margins, sequential declines in revenue growth. >> too many smartphones. >> exactly. >> samsung, i thought they had good numbers. maybe we just have -- now, look, they've got great stats in apple telling you not everybody has a smartphone. obviously tablets can replace notebooks, ultrabooks. maybe we're just at one of those moments where kind of you have one, you don't need a new one. >> right. >> hastings did tell you the next generation uses their tablet. they do movies. i like to watch movies on my cell phone, but it's not -- >> it's extremely disconcerting if i think each company has reached peak penetration of whatever market they have, when

steven did his big announcement of apple a few months ago, there were concerns component orders were slowing down. he highlighted the fact that google and microsoft, when they reached their pe peak, that coincided with peak penetration in their markets. after that pe started to decline. >> look, when walmart put a score in all 50 states, that was a peak in wal mrt. limited, the same thing. that's what you have to watch for. obviously, if they had said on their conference call, we've got this new wij it that you've got to have, i think the discussion would be different. they did not give us the new wijity. they did not give us an acquisition. they gave us no reason to think that, well, you -- i wasn't even focused on saturation if they had given us something. i wouldn't be as focused on saturation if they said, listen, we're building the best. yes, they're building the best.

that's not good enough. not for this market. where we're going from growth to valuable. >> by the way, amazon.com yesterday, new 52-week high. so talk about source of funds. you know, this one is one that is benefiting from apple's decline. >> amazon's doing quite well. amazon is de facto, place to buy a pc, the number one pc being sold is -- >> when we come back, a shortened trading week coming to an end. how to finish off on a profitable note. the "mad dash" is next. microsoft analyst rick sherlin, should the tech giant be involved in this potential buyout of dell. take one more look at futures. [ wind howls ]

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gamble. a company either growing share in 50% of their business or more. >> the ceo came in. no longer am i critical, i am a huge believer in this man. we talked for a long time. he said, listen, watch what i do. what did he do? he beat earnings handily. 122 versus 111. organic sales better than expected. 3% to 4%, and all he did on his quarter is beat himself up and

say we're not done, we're not done, we're not done. a fabulous conference call. mcdonald's back. this could go meaningful higher. this stock is poised, is poised to be maybe the best stock in the dow. >> mr. mcdonald came off the wall of shame. a couple comp trollers were bad. there was open revolt in the conference call. he answered his critics. this army ranger answered his critics. i asked him once, i said, maybe you're not tough enough. he said, what do you want me to do, choke you with your bare hands? i said, no, i was thinking more about layoffs or something. i like this guy. he means business. and this was a breakout quarter for him. congratulatio congratulations, mr. mcdonald, du a good job. it's no longer old mcdonald had a farm, it's new mcdonald has a hot stock. >> we'll talk more about p&g in a moment.

bright horizon family services testing the ipo waters. we'll bring you the firm's opening trade followed by the ceo. a live interview with duncan niederauer as he rings the opening bell from davos. we're back in a moment.

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♪ take a look live picture as the nyse at davos getting ready to ring the opening bell. you see maria bartiromo right in the center of that picture. we'll go out to them when that bell does ring in about a minute's time. we're watching very big news in the currency markets. i want to highlight this, because it's something that has been off on the equity markets. positive comments, relinch aunc the euro. >> i remember when euro was in the last debt gross. wrong. >> great britain, uk, still

eurozone. >> a lot of commotion down here. we look at the live feed from davos, switzerland. >> they're not happy. [ bell ringing ] >> at the nasdaq, starz celebrating its spin-off from liberty media. >> there's speculation about starz. but when i talked to a number of people who run various media companies, it might have been considered as buyers of that. they're saying, not me, check with that guy, and he said, not

me, check with that other guy. we'll see if there's a potential acquirer of starz. >> netflix yesterday in the conference call, hastings was saying the great cable channels need us. you can't just jump in. before "breaking bad" you need a stream. >> netflix stepped in where starz has stepped out. >> s&p gainers for the year, netflix number one. >> is that true? >> up almost 59%. number two. best buy, number three dell, if you can believe that. >> name me three stocks that have come back from the dead. >> that would be dell, best buy and netflix. >> you just dazzle me. >> thank you. >> r.i.m., speaking of back from

the debt, up 2.6% in today's session. we mentioned them because they moved the stock. but there were reports that they were interested in potentially buying part of r.i.m., or some sort of involvement. it moved the stock. it continues to move the stock today. >> hard to imagine it would happen or not. if it's deemed a national champion in canada, they're not going to sell another company to a chinese company. >> it is a great point. >> when you sell fertilizer to the chinese, will they -- >> but remember, they said that's it, we're done. >> that was in that particular area. >> right. >> that being a key natural resource controlled by that company. >> fertilizer, they also have a cartel there. they had to have the cartel weigh in. >> slappy happy in that fertilizer business.

don't come after me. there's no hotel room. >> that's true, they're already after you. >> mary jo, by the way, i was recruited by her and her husband at one point. >> really? >> about the only people who wanted to hire me. no, i went to goldman. >> it all could have been very different. >> instead of wearing zania, i was wearing that kmart suit. i got rejected by giuliani. i've always been up front about that. he said, you've got to be top of your class. i was not top of my class. >> goldman is taken to a neutral over at citi. citi says valuation, nearing fair value on their equity targets. goldman in return raising their price target. >> oh, these guys, look, i've

got to tell you. the two downgrades at goldman, look, if we're back in the old era, as opposed to the new era we're in, it's going to earn a lot of money. it's got a very leveraged situation. you won't want to get off the horse here. i think everyone's still playing by the old rules. they're like, whew, stock's up. look at r.i.m. how many people were like, oh, thank you, it's back at $12. this is a different market. it's a different kind of market. people have to stick with these stocks that are inexpensive. you don't be able to get back on. >> that's true. there's a lot of questions, when i know hedge fund managers were taking risk off and drawing down a little bit and wondering whether that is in fact the right move and you're correct, and there's a lot more momentum to come, and perhaps multiple expansion in the future. >> goldman traded at 200 bucks. some portfolio manager will say

it's better now than it was at 200 bucks. the company has a lot of business to come on. saying this morning that the m & a business could come back. it could. it would be huge for them. >> they're saying positive things, all those guys we've had, whether it's gorman or moynahan or blankfeen. they all seem to have picked up on that theme. thanks, guys. appreciate that. >> let's get to mary thompson on the board -- on the floor watching with more. >> we have gains across the board in early trade. the nasdaq shrugging off the after-effects of apple's decline yesterday. right now, up just about seven points. the dow and s&p continue their march higher. both on track for their fourth straight weekly gain. nasdaq on track for a decline, first weekly decline in 2013. a lot of people wondering, do we go higher from here. one trader said, you know what, he said a number of these managers may be behind as far as performance goes in january.

he said there is so much money, to echo what you were saying, on the sidelines. he thinks we're going to continue higher from here. we're not only seeing multi-year highs here in the u.s. the dow within striking distance of the all-time high. but around the world we're seeing a global rally as well. today we have strong business confidence in germany, now at a five-year high. the stock market there. in japan, two and a half-year high as the yen continues to weaken. you heard melissa talking about the strength of the euro earlier. that could be a sign about optimism about the global economy, in large part because one strategist told me it appears japan, or the yen is a reserve currency, the attractiveness there is starting to diminish as people become more optimistic about risk asset. great horizons a great child care company based in watertown, massachusetts. the company was priced at $22 a share. but right now the indication is

$25 to $27. 10.1 million shares being very well received by the investment community today. a couple of the stocks we'll be watching today. the earnings parade continues. halliburton opening at a 52-week high after it came in with earnings of 63 cents a share. its international operations helping to offset the weakness in the north american operations. the company also actually said weakness in north america could continue this year -- continue through 2013. but obviously investors like the news on the results. hasbro had a weak fourth quarter. the earnings revenue came in below expectations. the company plans to cut 10% of the work force as a result of the disappointing earnings. there you can see its stock under pressure today. lastly, you heard jim talking about procter & gamble today. kimberly coming out with earnings 2 cents ahead of expectations. its stock is higher as well. melissa, carl, everyone, back to you. >> thank you, mary.

procter doing good. sharon? >> we're looking at a little uptick the oil market. the weakness of the dollar is helping that. a lot of traders are also, despite all of the news that we've gotten about the seaway pipeline over the course of the week, they think the little glitches there will be short-lived. that's another reason we've seen a rebound after the sell-off we saw in the middle of the week. we're also watching what's happening with crude supplies overall. they usually build this time of year. citigroup said they're bearish oil because of what they're seeing on the inventory side. we're also looking at what's happening with gold, because gold is showing further weakness. the strength in equities is taking some of the momentum out of the precious metals market. we also have options expiration on monday, that could lead to some traders readjusting their portfolios ahead of that happening. david, back to you. >> thanks very much, sharon. the s&p sitting right at 1500.

one name we haven't mentioned, a decent part of that index, is at&t. the company having reported earnings after the bell yesterday. and they weren't particularly good, to more or less wrap it up for you in many ways. that being said, the stock itself is actually up. up about 1% this morning. very similar reaction to what were not great numbers we saw earlier this week from verizon. the problem, both carriers in part is margins. in part resulting from the enormous growth in the iphone. you make look at that apple quarter and say, what are you talking about. at the end of the day they certainly did, with 8.6 million iphone sales, you know the story here. remember, it's the subsidies. man, they are paying through the nose for that, aren't they. so you had perhaps what were wireline results that were expected. wireless also had decelerating growth in average revenue per user. that was also something else

being looked at. what happened at at&t, the company is talking about significant, or high single-digit increases earnings per share this year, because it increased its buyback enormously. analysts were expecting that they bought back perhaps $2 billion worth of stock in the fourth quarter. they ended up buying back almost $4 billion worth of stock in the fourth quarter. so you've got free cash flow, but what happens in the second half of the year and what happens to the stock prices as a result of the buyback perhaps slowing significantly. again, way above what people anticipated. >> don't they have to put more money in the business? >> they have a huge capital. they not that long ago, late last year announced the huge increase in capital spending. >> and they still have money left over? >> they're getting jammed with upgraded costs and subsidies. it will be interesting to watch the second half of the year. for both these carriers.

again, both verizon and at&t. they jawbone about having to fight back on subsidies, but it's not clear they will be able to do that. then you've got sprint who is going to be competing. he wants to get speed here in new york at his hotel room. >> if you knew nothing other than the subsidies, you would buy apple. >> and verizon. you would say, look -- >> that's still the people's choice. >> they were selling a lot of iphone 4s than iphone 5s. people were not upgrading. but they were moving to that spot. >> and a lot of minis. a lot of ipads activated. again, look, apple is clearly now a cold stock. you can understand why the company, apple, is saying, listen, we're good. given the choice, people are still choosing the iphone. >> they are. >> maybe not the iteration that -- >> not the latest one.

>> okay. >> it raises eyebrows. >> yes. >> it does. we are still, by the way, on ipo watch, waiting for bright horizon family services to open trading. priced at $22. after that happens, stick around for the interview with the ceo. speaking of ceos, it's duncan niederauer live from the world economic forum in davos. that's straight ahead. look at this morning's early movers for a friday here on wall street. [ female announcer ] what if the next big thing, isn't a thing at all? it's lots of things. all waking up. connecting to the global phenomenon we call the internet of everything. ♪ it's going to be amazing.

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we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job.

[ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location. earlier we showed you nyse duncan niederauer ringing the opening bell in davos, switzerland. maria bartiromo is with duncan in davos now for an interview. maria? >> hi there, melissa. thanks very much. i'm with duncan niederauer right here in davos. thanks for joining us. >> always nice to be here with the best.

>> this is absolutely spectacular here in davos. let me ask you about this market. once again we opened stronger. 2013 has been on fire. what do you make of this? in terms of all this money moving into stock. >> i think it's more than just '13 being a lucky number. if you look at 2012, as you and i were just talking about before we came on, it was a quiet 15%-plus move in the equity market that a lot of people didn't participate in because they were in short-term fixed instruments. it looks like january will be the first month of the inflows into the equity mutual funds for a while. i heard from one big money manager here yesterday for the first time this week, they see people moving into equities. that hasn't happened for a while. maybe this is the beginning. if that's the case, it should be sustainable. >> we talked so much about the last year about all the people sitting on the corporate balance sheets. rates have been at rock bottom levels. at the same time volume has not

been impressive. money moving into stocks, yet volume is uneventful. >> volume over time is always tied to confidence, right? as you know, firsthand, given your viewership, people still aren't confident. this may be a sign they're starting to get confident as they move in. we haven't seen the uptick in volume that would normally accompany the increase in the equity mutual fund flows, et cetera. it's nice to see the s&p up 5% on the year already, give or take, but we haven't seen the volume follow through. i personally think volume is tied to confidence. it will only come with meaningful comprehensive solutions out of washington. >> that really has been critical. let's stay on washington for a moment. president obama nominating mary jo white as the s.e.c. chairman. what's your take on her? >> i don't know mary jo personally. but i know her by reputation. her reputation is outstanding. she's going to come in at a very important time. there are lots of issues that have to be dead with immediately.

we've enjoyed a close working relationship with chris cox and mary shapiro. >> the regulation has gotten harder for financial services. what's your take on the regulatory environment. it seems the financial services over the last couple of decades has been riding a wave of positives. deregulation, globalization. going forward economies are looking inward and regulation is only getting tougher. >> a lot of those customers you're talking about are our biggest customers, a lot of those financial institutions. as long as they are going to be facing a head wind like that, you see a cut on volume, too. they have fewer strategies they're carrying out because of all the capital charges. what i heard yesterday that i think is the biggest issue is not the breadth of the regulation, that's to be expected after a crisis, the problem is the lack of consistency across different jurisdictions. we all run international companies now. if you start to have the different regimes in different markets, it's almost impossible

to run a business that way. i think that's what we have to struggle through still. that's going to be a head wind for a while, i'm afraid. >> you've got a lot of regulators in europe, in the u.s., and they're all wanting different things. >> it's not converging. you could argue it's getting wider at a moment we need it to converge. that's only going to happen if the big financial institutions and the regulators can work hand in glove. i've seen signs this week that's possible. but the follow-through remains to be seen. >> you're doing a deal with i.c.e. let's talk about whether or not you'll see resistance here. you've been down this road before. are you expecting any barriers in terms of lawmakers saying there's too much overlap? or you don't see a lot of overlap? >> thank you for reminding me i've been down this road before. i was sitting right in this chair. but you weren't sitting in that chair next to me last year, as i recall. we're starting another one here this year. i think this one, the earlier

actions we've gotten this week from both the u.s. and europe are that this seems like we'll have a smoother path to approval. but you never want to assume that in the process. we'll continue to work hard. we think this one is less complex. >> i.c.e. has a lot of commodity products, energy. >> so they've got the energy and commodity futures, we've got the interest rate futures. they don't have an equity business or commercial technology business. there is almost no overlap. so it seems this should be pretty routine, but it's a long process that we have to go through. >> are you going to sell 9 listings business? >> no. >> the nyse brand stays, the i.c.e. brand stays. we intend to sell off the four continental exchanges in europe after the closing the deal. that will be a 2014 event. that's also been very positively received by the regulators. >> you think this deal closes this year? >> end of q-3, hopefully q-4 as

well. >> duncan niederauer. >> thank you. >> keep an eye on bright horizons family solutions. opens at $27.75. now going public. strong start. the ceo of the child care services provider will join us at post 9 in a bit. but first -- up next, we let cramer loose. what can we expect from the unchained market maestro? six stocks in 60 seconds when "squawk on the street" returns. may not be with fidelity, s but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create

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we can't stand losing, that's why we have "six in sixty." >> caterpillar, the actual machines aren't selling that well. very weak. >> upgrade of auto desk. >> when dell -- when goldman

went from sell to buy, dell, that was the signal something was going on. they go from sell to conviction. i have to find out what's going on. >> mccormack? >> it turns out the spices people didn't buy, this was starting this one. that's supposed to be the last thing you cut back on. talk about vanilla. >> barclays. >> i think people are feeling the stock has had a run. i don't think so. i think it goes higher. >> just saying what is proprietary. absolutely nothing. >> we've got coats. what's kors going to say? >> goldman says kors is good. i think that's a good call. >> let's talk about the broader market. earlier on you were saying, if you were negative on the stock, now that you're back to your high water mark, maybe you want to get out. >> netflix, i like netflix. i like the product.

but the stock, if you bought it two weeks ago, you know, at 90, you have to take a little off the table. there's nothing wrong with ringing the register and letting the rest run. i do like the idea of looking at caterpillar, kcaterpillar repors on monday of next week. maybe you pick it up here. there's nothing wrong with being price sensitive. >> if you bought facebook in the 30s and road it to the teens and back -- >> you got lucky. if you rode facebook. i think facebook will have a decent quarter. what we're seeing is, tonight i've got warehouser, this is the best example. here's a company that reported an amazing quarter, and the stock's down. buy it now. that's profit taking, carl. that's your opportunity. wait for the profit takers.

if i were interested in facebook, i would wait for the profit takers. this was at 29 last week. somebody's excited about the conference call. you're going to get your chance. the market is giving you chances to get in. >> what else is coming up tonight? >> tj rodgers, dr. rodgers, down to ten. they make touch screens for not apple. and a lot of products not in great demand. that's interesting to me. dan fulton went to my high school. so, therefore, he's a genius. >> rest up for the weekend. next week's busy, too. >> you bet. >> 6:00 and 11:00 tonight. [ engine revving ] ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just to stay alive... but feel alive.

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welcome to "squawk on the street." we have breaking data in the form of new home sales. the number came out at 369. we're expecting 385. a little bit of a disappointment. but the last time it was revised up to 393. so all in all, it's probably a wash. the actual numbers were bad. back to you, carl. >> jim, thank you very much for that.

let's bring in diana olick for more on what the sales numbers might mean. >> actually, a big disappointment. we're looking at contracts signed in december. this is different from the existing home sales number i always like to point out. these are people in december signing contracts for new homes. we did see a drop unexpectedly of 7.3%. prices up, how much exactly? 13.8% year over year. this is the new pricing power that the home builders are getting because we're seeing the existing home prices jump up so high. it's all about supply and demand. you have new home supplies at 4.9-month, which is higher than it was last month. still pretty low. the builders are getting this new pricing power, which they're starting to see on their bottom line. the pricing number is a good sign for the builders. again, going forward, the competition is still with rentals. we're going to talk about that coming up on "power lunch." a lot of home builders looking

into building multi-family apartments. the month-to-month number, a disappoint, but i like the prices. >> thank you very much, diana olick in washington. the dow, the best january since 1994, up by 31 points. the s&p 500 just hovering around that 1500 mark. 1,499 right now. nasdaq higher by about 17 points. >> microsoft analyst rick sherlund is here on the set. should the tech giant be involved in the potential buyout of dell. market approaching new all-time highs. blowout second quarter from p&g. a tale of two techs, research in motion up more than 133% in the last three months. while apple's down nearly 25% in

the same time frame. what do the charts have to say? we'll check the technicals later on. we have to get back to microsoft here, trading higher after second-quarter results narrowly beat on the top line. a buy rating on microsoft at $32 price target on the stock. reversal in the shares this morning, rick. i'm wondering what your take was. in the after-hours session they were trading lower. now up by nearly 2%. >> nobody likes it. but it keeps kind of drifting higher. so i think a lot of bad news is conventional wisdom. and second half, you start sh t shift -- shipping a lot more products. i have to apologize to people that i'm recommending it, which is a good sign that probably a lot of bad news is out on the stock. >> take your research note and you hit your recommendation on the stock, i would read it. for the most part i would think

maybe your hold rating is on the stock, it almost sounds like you're apologizing in here. slow adoptions of windows 8, off to a very slow and disappointing start. many consumers do not care about office capabilities which is supposedly the next catalyst of 2013. what do you see in the second half? >> i think that's why you would keep a buy on the stock, if you think six months from now, things are going to start to look a little better. intel is going to be the big help with their new haswell processor, so a lot of the interesting form factors of touch -- they're kind of tablets and ultrabooks combined. they haven't even shipped yet. i think once you get more devices out there, windows will probably resonate better in a market that consumers don't really need office. as they start to buy these for their employees, sales people that runs the new version of office, i think that's when the stock starts to gain a little

more traction. >> in terms of the windows 8 numbers specifically, there were concerns going into the quarter that perhaps some of those sales of windows 8 were actually discounted upgrades from windows 7. is there evidence they're not reaping the full revenue potential from windows 8 so far? >> yeah, i think those numbers are kind of soft numbers. you don't know how many are $15 upgrades and how many are shipments with new machines. i think in general, my conclusion is, it's off to a slow start. >> is it your impression they're about to cut prices? there were comments made by the cfo that the financial "times" has written up today as a big hint that price cuts are on the way. >> the journal had that same conclusion. i listened to the call and i didn't really pick that up. perhaps they had subsequent conversations. they've got room to reduce prices if they'd like to. apple is actually a price umbrella for microsoft. what you worry about more is android commodityizing the

targets. they've got plenty of room to make a good margin and pay this tax to microsoft for the operating system. i'm not so concerned about apple as much as just the whole market getting commoditized. on the consumer side, i think that's a tough market for microsoft. if you don't need office, you really don't need to pay a premium for your products. they can afford to cut price on their hardware. microsoft's hair wear shipments are material on the market. they're there to show good design. it's important that their partners -- >> you could say they're out of touch. you mentioned office. i see now there's a suggestion that actually when the new office suite comes out, it will be licensed. you will pay a monthly subscription in order to have microsoft office. that doesn't seem to be where the bulk of the market is at the moment. that's not what consumers are doing, generally in their lives,

is it? >> actually, simon, 20% of office's consumer, you know, 80% is enterprise, and 60% of enterprises are on subscription already. so there is a pretty significant migration to subscription that's well along. so the actual transaction revenue is now a pretty small part of the total. >> it's wise even in retail, even to the consumer on the street. >> very small part of the business. maybe 10% of office, 5% to 10% is actually retail. >> is there interest in dell because they want the pc to live, or they want a piece of what dell will be, different? >> carl, i've seen this a number of times with microsoft. they're kind of strategic investments. it's not necessarily intended for a direct return. but they nurtured their ecosystem, helped their partners. they've done it with yahoo! nokia and others. if dell needs favors, they need $2 million, $3 million.

if it makes dell a stronger partner, the concern i would have is, does it alienate the other hardware vendors in another way. microsoft has a challenge with those vendors. you definitely don't want to encourage them to carry the android. because that's not good for microsoft. >> that would be the beneficiary of a revolt of any kind? >> correct. >> would you want microsoft to use some of its cash to make this investment? i understand your arguments, but at the end of the day as a shareholder, is that what i want microsoft to be doing? >> microsoft generates that much cash in a month or two, so it's not important to me as an investor, if they park $2 billion or $3 billion in dell stock for a while and help out a partner. hopefully they'll get some strategic benefit of keeping dell viable as an important partner of theirs. >> rick, on the larger issue of the $66 billion in cash that continues to grow, is there any

expectation of a significant capital return? i know we have these conversations every few years. >> right. >> or is that simply off the table? >> if they have $68 billion, $61 billion of that is offshore. if they wanted to bring it back, they have to pay an additional 20% tax right now. unless the tax laws are changed through repatriation, i think that cash is just going to sit there offshore. >> or do another skype deal where they use that cash? >> you could use it, particularly for offshore acquisitions. but for the most part i think it's not able to benefit shareholders. it's just sitting there offshore in mostly government bonds offshore. they could bring it back. i think what would be most likely would be a much more aggressive share repurchase. they won't do a one-time dividend like they did years ago. >> your sneaky long is up 1.5%, rick. thanks for stopping by. >> thank you. >> rick sherlund. what do family ties and initial public offering have in common? we'll find out when the ceo of

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it's our job to look after them. ...it's my job to look after it. ♪ good morning. welcome back to "squawk on the street." look at shares of halliburton, popping higher after releasing the fourth quarter earnings report. revenue higher than expectations as well. comments on the outlook

contributing to gains today. the company saying it sees 2013 eastern hemisphere margins averaging in the upper teens. that forecast better than expectations. the stock popping more than 4%. >> thank you very much, jackie. in the last 30 minutes, bright horizons family solutions surged on the big board debut at the nyse. bfam is the ticker. currently trading, up $6.25. joining us on a first cnbc interview, david lissy. good morning. congratulations. >> good morning, simon. good to be here. >> you had a two-week road show. how difficult a sale was this to people? >> we're pleased with where we are. we come back to investors that did well with the company over many years. wee rekindled those relationships. obviously the mission we do is critical. but to have the story so well received once again in the markets has been gratifying.

>> how has the story changed since you went private? what did bain do to you in the four, five years that you now re-emerge as a different company? >> i think we've worked with bain for a long time. they put the initial venture money into the company 26 years ago. we went private with the same people who supported our growth. we emerged having grown at a top line and earnings in every single year. i think there's nothing that tests the resilience of a business model more than going through the two toughest years in the company's history. today we reemerge with a broader suite of solutions for our clients and broader footprint now having expanded the company out of the united states. >> it's a capital efficient model. in other words, you don't go out and spend loads of money on the real estate, for instance, to start off your centers. you actually don't have to put that much money in. >> well, the model, you know, it starts with the fact that employers have a stake in these

issues. by the third party sponsor providing the capital, we get two important outcomes. we get a very capital efficient business, long-term contracts, revenue stream, predictable earnings stream. secondly, we get a better outcome for the parents and families we serve because we invest more money in teacher salaries, better ratios of teachers-to-children, everything i wanted when i as a parent used the centers. and what many families out there want for their children. >> there's a lot discussed about how bain leveraged the company, the balance sheet issues that still remain about debt. how aggressively will you be be paying that back? >> we emerged just -- re -- we r interest rates in half from when we went private. we're down under five turns, and expect to quickly de-lever further from there.

you never know how you'll behave when you're in the market. but i think through our growth and model we have a more rational capital structure. we think having a few turns of debt on the balance sheet makes sense. >> you'll use the proceeds from the ipo to pay down the debt, right? >> we're happy, of course, i don't know if we're happy, we're happy to get rid of those notes and have a consolidated term loan on the cost of money that is far less -- >> four or five times turns the leverages. do you see it going down substantially as a result of the cash flow you're getting from the business? >> we'll quickly be under four turns just on the growth plan in this coming year. we think 3, 3 1/2 turns of the leverage is the best way to return value to our shareholders, given the cost of money that we're at today. i think we're comfortable at that level. >> and the main focus, the clients are the blue chip companies. once they become aware of the

margins, do you think that they're sustainable over time? i think some of the contracts are returning you 25%. now, if i was a businessman sitting across you at the table, and you were looking after my children, i would say, i need a better deal from you on our next contract. >> remember, i think we're offering a high value service at the highest level of quality. and ultimately i think what our clients and the parents care most about is the level of quality of service with such an intensely important thing to them. and so ultimately i think, you know, our ability to earn a fair margin is -- >> do you think 25% is a fair margin? that's in a competitive environment. >> our margins are more like 16%. you're talking about gross margins in businesses, we have overhead associated with that. we're not earning 25% margins on the contracted business we have with our employers. after overhead, and ultimately i think we're earning a fair

margin in the high teens, mid-teens. which i think is fair, given the quality we've been able to -- >> bain's going to start controlling the company after the ipo. but i assume they'll continue to sell down. have they articulated at all their plan in reducing that stake over time? >> i can't speak for bain. but you know how these things work. they'll own a good deal of the company. they haven't sold any shares. we haven't sold any shares as management in this ipo. and my expectation is, over time, we'll provide some liquidity to the market. as they figure out the right value. but i think they really support the business. the go private period was pretty much about growth and not about cost takeout. as i said, we were one of the few companies i think that grew, and grew our margins during the two most difficult times. i think hopefully as things get better, we've got an even better runway. >> big debut, david, congratulations. >> thank you. >> you must be very, very patient. >> absolutely.

>> as have i. >> as you know so well, carl. take a look at the two sharts. r.i.m. up over 130% in the last three months. apple's down 26%. apple was the worst s&per for the year. unbelievable. two very different techs. we'll check the charts for the next level to watch when we come right back. remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location.

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let's get back to the markets as they approach the all-time highs. sectors leading the way higher, we look at the financials. >> for stocks, life could not be more different than any sector other than the banks. let's go back five years, january 2007. that's when most of the banks hit their highs. now, the problems for the banks, as we know, started earlier, financials starting trending down, just 20% that year. mid-year, blackstone went public and investors started to lose confidence in the financials, so much so that bear stearns went in a straight downward direction, hitting an all-time high on january 12th, but losing

almost 100% of its value before it got scooped up by jpmorgan. many of the sectors' companies are now extinct. if you look back at what remains and what the financials have done, they've been leading recent rallies. but the sector has fared the worst since those october highs. still down 51% from that peak. faring the best, credit cards, visa up 182%, since october 9th of '07. mastercard leading the entire sector, up 221%. even though the banks have been the market darlings in the last year, overall to the huge drops fell toward the bottom of the barely. citigroup, bank of america. look at aig. even though we've been talking a lot about it, the insurance giant flying high, over $1,000 per share before the $182

billion bailout. a little more humbling. >> thanks for that, kayla tausche. the s&p continues to flirt with 1,500 this morning. warren meyers is with dme securities. he joins us here at post 9. warren, good to have you. >> good to be here. thank you. >> this will be eight straight for the s&p. >> yes. >> we haven't done that since '04. when is the breather coming, and when it comes, do you buy back. >> i think we're close to the breather now. 1,500 has been a target. we're on the verge. we haven't gotten through on the futures. but we're right there. a lot of important data coming out next week. i think this is time for a quick breather. i think 1%, 2% pullback only. we've had a strong momentum. that momentum is still underlying this market, giving it a nice base. i would expect a small pullback, and i would jump on that if you have the opportunity. >> what propels us higher?

do you buy into the notion there's a lot of cash sitting on the sidelines. i think as of late there are people out there saying, no, there hasn't been a lot of cash sitting on the sidelines. >> you've got to look to see who's been in the marketplace. you've had professionals obviously in this marketplace, but the vast majority of the individual investors haven't been in this. if there's any sentiment change to get the group in, that could be an inflow of money back in the market. >> does that explain some of these january flows? do you think those are for real? >> yeah, we had so many months of straight outflows, and we finally turned the tide there, it seems. not that they're gangbusters going inflows in the equity market, but we've seen the trend change a little bit. i think that's the beginning of the trend. >> warren, i'm sorry to say this, but one of the reasons the upset markets are doing what they're doing, is the banks are pumping -- reportedly today we're we gining to see them

withdrawing. the ecb is having money paid back. the president of goldman sachs today in davos has warned of substantial losses on assets, on fixed income assets as we move forward, as interest rates spike. what happens during that debate? i mean, how do people protect themselves? does it cause the equity market to wobble, if you get sudden moves in assets? be it farmland in the midwest or treasuries? >> i look at it this way. i think the central banks around the world are telling you that you want to be and need to be in risk assets right now. i don't see that changing tomorrow or next week. there's going to be a trend to change that way down the road, but every indication i've seeing is risk assets the place to be for the short term and medium turn. there will be a little bounce, but the place you have to be is in the equity market. >> on this binary view that the central banks keep doing what they're doing, they have to talk about exit strategy. some people will react to that.

>> is that going to start tomorrow? no. look what the fed has said. 2014, 2015, some of the fed bankers saying you won't see much reaction until 2015 or later. you've got a little ways that i think you would be getting out a little too soon if you followed your strategy right now. >> is there a big macro risk? people saying germany will go negative soon. >> everything's cyclical. we've been ahead of the curve. the damage was done here first. we're starting to come out of it very nicely. slowly, but nicely. i think you'll see europe follow in that same pattern. maybe a year, year and a half behind us. yes, they have potential for negative numbers, but that will rectify itself relatively soon. >> we'll look back at this conversation and -- >> i'm sure you will. >> thanks, warren. >> thank you. still ahead on the program, we'll check what the charts are saying on apple's recent downturn. and research in motion's big

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3%. new 52-week highs. raising guidance for the fiscal year. 3mj & j hitting record highs this morning. new home sales for december coming in weaker than expected, 7.3% from the previous month. 2012 calendar year were the best since 2009. >> one whistleblower on the dreamliner's battery. >> it's starting to get more traction in part, because when you have whistleblower coming forward about a part now in the news, a lot of people saying are there others out there. the ntsb yesterday gave an update in terms of where the investigation stands, including showing the media what's going on in the ntsb lab, seeing the charred batteries from the 787 dreamliner that was the one that had to be put out in boston. well, now they still say they do not know the exact cause of the batteries catching fire. as for those batteries and one other component, the charger,

the charger for the batteries built by a company called secureaplane, a plant out in tucson, arizona. back in 2006, there was a fire involving lithium ion batteries for the 787 at the secureaplane plant. a worker there warned the company about the batteries and the chargers and the possibility of fires. >> these lithium ion batteries, too much heat and they'll explode. it will be a nightmare. >> michael leon was dismissed from the company for repeated problems on the job. secureaplane told me yesterday the battery charger for the dreamliner was successfully tested. there was a fire in the facility in 2006 during one test. however, the current boeing 787 investigation is unrelated to the 2006 fire.

take a look at shares of boeing, it is worth noting, we're showing you a chart going back to the 17th. that is when the dreamliner was grounded. and since then, shares of boeing have gone up, guys. and yesterday we heard from the ceo of united airlines, he came out and said, when this is ultimately cleared, people will flock back to this plane. despite the fact they don't know exactly what's wrong here, you still see the customers. that's the primary concern for boeing. back to you. >> for the moment, phil, how long will it be grounded? >> that's a good question. if we're looking at something that goes for several months, it's a different story. maybe you have the airlines saying, okay, we're not too pleased we're going to have to wait this long. keep in mind, there's only 50 of these out in service that the airlines have had to cancel flights and substitute aircraft. it's not a huge grounding in terms of numbers of aircraft being brought down. >> but there are many on order. >> absolutely. >> who in the middle east is

going to go, you know what, maybe the dreamliner isn't worth it for us. >> if you were in line to get one in 2015, are you going to jump out of line to get one from airbus? you're going to be in the back of the line at airbus, and that will put you back to 2019, 2020. >> phil, thank you very much. phil lebeau for the latest on the dreamliner 787. apple in a downward spiral as research in motion surges. what are they saying about the two very important technology companies. director of technical research is here. good morning. >> good morning. >> what is the damage to apple now from a technical sense? >> well, apple's been declining for quite some time. the damage has been done. you know, on the charts, certainly not just on the daily charts, but on the weekly charts as well. quite frankly, we think for

apple to get back on track as a stock, it's a good technical trader. it would have to surge back above 500. so this gives traders on a short-term basis a lot of leeway to play some oversold trades. also for down side risk still yet to go. in terms of support levels, apple is trying to base out today. our level was around 448 to 450. we hope it gains some footing. the stock is certainly oversold enough to generate some type of snapback rally. but if it cannot hold this, we're looking at a 390, 395 handle for secondary support on the stock. so we think there's a significant technical damage done on the longer term charts of apple. >> unless it closes above 500, and it's basically dead money until then for the next 10% or so higher? >> well, yeah. i mean, our bigger focus with apple is that it's no longer a

market leader. what's really amazing to me is the resiliency of the broader markets as apple has been in this kind of free-fall. look at the small mid cap sectors breaking out to all new sector highs. the market is able to do this without the power of just one or two stocks. i think ultimately that's healthy for the markets and ultimately those markets could buoy apple's stock price. but we don't think it will be the leader it once was. >> what about research in motion, obviously we're awaiting the full return launch next week, down from a low base. extraordinarily well recently. how is it performing from a technical perspective? >> yeah, i mean, so far, it's been performing great. the chart of r.i.m. is basically the inverse of apple, as one was topping and one was in distribution for the last several months, one has been basing. r.i.m. has been under accumulation for a long time now. the only thing we would caution

against is on the short-term basis, the r.i.m. shares look overbought here. so you could see a pullback or fade in the stock. quite frankly, we think that chart is bullish above $15 support. we think that could charge higher into the low to mid-20s on the intermediate basis. inverse charts there. we'd be buyers of one and fade the other basically. underweight apple at this point. >> dan, thank you very much, joining from janney capital markets. thank you. let's send it over to jackie. >> good morning, melissa. looking at the reaction to the december new home sales numbers. the monthly number was weak, but that yearly number was the highest we've seen since 2009. the charts of the home builder is a little erratic this morning. you can see them there. back over to you, carl. >> jackie, thanks so much for

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the dow this morning at a five-year high. the s&p 500 flirting with 1,500. steve is managing director at webb bush securities. steve, great to have you with us. >> good morning. >> i've been hearing in the marketplaces that the volatility index is so low, that people can remain confident in staying long, because they can buy cheap protection. i'm wondering what your take is on these market highs here. >> well, certainly that's a contributing factor. the cost of protection is very, very low. but i think the biggest factor is we essentially have zero interest rates, and essentially have very expansionary monetary policies virtually worldwide in developed markets. this is providing a tremendous floor underneath risk to assets

and will continue to do so as long as these policies remain in place. >> what do you make of the components that are pushing the markets to these highs? i mean, our previous guest making a point that midcaps, smallcaps trading close to record highs. we're making this move without a big market leader in apple. >> well, the most risky assets are doing the best. the smaller cap names, that's only natural given the impetus of this, which is very, very cheap money. i mean, you're going to continue to see this rotation out of secure or less risky assets into more risky assets, which is what the central bankers want, what they're promoting. that's what essentially what you're going to get. i really only see two things on the horizon that are potentially going to be problematic to the market. one would be a resurgence contagion in europe and fiscal cliff 2, so to speak. there's going to be a battle

between republicans and democrats at some point in the spring. the market will look unfavorably upon that. those two issues aside, i think the engine's going to be low interest rates. >> there's a third one, though, a third potential problem. the asset markets will stay like this for as long as the central banks continue to do what they're doing. isn't the bigger risk that we get an inclination that they'll start drawing this monetary stance and ahead of that, in particular, fixed income, some would say could very severely be impacted? >> well, you're absolutely right, simon. they start to talk about tightening, or if there is some indication that this policy is going to be removed, the fixed income markets are going to get obliterated. at these low rates, we'll essentially have a very negative return. i just think that, you know, i hear what you're saying. but i think eventual -- that

eventual action on the part of central bankers is months away. it's not going to happen right away. >> let me ask you about -- let me ask you a practical question. a lot of people watching now will have their 401(k)s automatically invested by their employers in targeted funds. and a proportion, depending on their age, of that will automatically go into fixed income. do you think -- i appreciate you're not a personal finance guy, but on the split between stocks and bonds, do you think people need to get hold of their 401(k)s and potentially come out of targeted funds and make an explicit choice, stocks or bonds at this stage, for fear they're in a sector that you just told me could be obliterated? >> absolutely. i think anyone buying long-term fixed assets right now needs to have their head examined. you've got the 30-year yielding 3%, the 10-year yielding 1.8%. if rates start to move up, your

capital is going to get obliterated. fixed income is the wrong place to be. and i would certainly not buy any assets that are yielding less than 5% in the marketplace today. you are eventually setting yourself up for some very extreme pain. now, that pain is probably 10, 12, 24 months away. but for the investor, you're talking about, the 401(k) investor who is sort of accumulating his cash over time, probably not making a lot of changes to his portfolio, when 2015 or 2016 rolls around, they're going to have a very rude awakening if they've been buying fixed income assets today. >> how does this run at record levels play out here? are we due for some sort of a pause at this point in order to convince you further that this is a market that is heading higher? >> well, i think we've obviously had a big move in january. we're up some 5% pretty much across the board, and maybe more. it's happened very, very quickly. you would naturally think from a technical basis we would get

some flattening or slight correction. like i said, i think the two most likely stories are going to cause that. there will be rumbling in europe where the populous of peripheral europe stands up and gets tired of the austerity programs and causes issues greater than they're causing today, or fight it out in congress between the republicans and democrats, or another debt increase in april or may. these stories bubbling up right now could cause a correction. and i think we could get something in the near term. but i think we'll go over that like a bump in the road. i think as long as this central banking policy stays in place, and what simon says doesn't come to fruition about taking it off the table, it's off to the races with interest rates at 0%. >> thanks for your time, steve. i want to take a check on shares of apple here. they're down by a little more than 1%. the level we're watching is the low hitting yesterday's session at 443.14.

a few dollars above that right now. keep in mind yesterday, closed to session lows down 12%. hovering at the new lows hit in yesterday's session. not good price action for the stock. we're seeing the impact on the s&p 500 as it backs away a little bit from the 1,500 mark. >> meantime, look at netflix here as well, soaring higher as people said all day long, with the inverse of what happened with apple. netflix, best s&p gainer. apple, worst s&p loser. >> symmetry. >> burning through cash, apple making loads of cash. >> we're going inside the numbers of starbucks to see how well sales are doing. and if those commodity cost worries are down for good. [ male announcer ] you are a business pro. executor of efficiency. you can spot an amateur from a mile away... while going shoeless and metal-free in seconds. and you...rent from national. because only national

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starbucks trading up after reporting earnings in line with expectations. a lot of strong metrics within all of that. david palmer is senior analyst at ubs. good morning. happy friday to you. >> good morning. >> tough to find any hair on the

quarter, at least from our standpoint. maybe you differ. i wonder if you got color on how january is shaping up. certainly from others, looks like we were in for more chop this month than in december. >> the company implied on their conference call that momentum continued into january. one of the things you can reflect back on in the quarter it was 7% same store sales. the u.s. retail business carried the quarter. that's fuel bid cool things they are doing in the starbucks card and loyalty. the reloads on the cards which are one out of four purchases are going through the cards, 36% growth in the reloads. that's fuelling the way above retail type of comp growth. it's probably the secret sauce on the core division for the company. >> when you're looking at record numbers of dollars loaded onto cards, why now? why is it catching fire now?

>> some of it has to do with the mobile payment technologies out there. on iphone you can get the automatic reload and certainly the company made a point of giving treats to those -- rewards for those that use the cards. so ease of use, mobile payment and certainly it dovetails with the availability of the brand for what is a convenience category. >> gives you a clue as to why schultz was enthused about square which was a few months ago. verismo. some reports call the results underwhelming. it's not a category killer. green mountain is higher and starbucks is higher. could more be done on that front? >> the launch is definitely a slow one. they have to find ways to drive adoption. there was competitive discounting happening in the small appliances arena against the verismo.

you are beginning to see the price per cup on k-cups move down to the 50-cent mark in greater degrees. it will be competitive in single serve. if there was a dark lining to the release it's a wake-up call that single serve will be more competitive and less a part of the story than perhaps the street thought a few months ago. >> in terms of china on the conference call china made it clear loyalty to the brand was deepening. it looked like it was following the same trajectory as loyalty in the united states. i wonder if you can model out what that could mean if people in china are using the starbucks card and are reloading and getting treats. if we follow the same path as the u.s. >> wow. that's a great question. in china the results are in the 10 to 12% same store sales growth range in the last few quarters. that's remarkably stable. we asked about it in the call. you know, arguably they are far

more stable than anything in retail. certainly restaurants, as we know. yum brands are having a tough time. some of that's chicken specific. digging into loyalty, that might be one of the reasons they are doing so well on a multi year basis. their stacked same store sales growth is pushing 60% over three years there. >> david, that's not true, of course, across the board internationally for them. one of the major risks to your buy is the international acceptance of the starbucks coffee brand experience around the world. four years ago, i have an apartment by the seaside and they opened a starbucks. every saturday there would be a demonstration, an anti-capitalist demonstration outside that the police had to keep at bay. in the united kingdom there is outrage because today haven't paid taxes for years. is that localized? you have a bizarre situation that they are offering to write ten million pound checks this

year and next year. is that a one off or a major problem internationally for starbucks moving forward? >> that seems to be a p.r. issue in the uk. the uk has been a more competitive space than what they have seen elsewhere. one thing that happened there is they had first movers in cost of coffee under whitbread making their entry into the market more difficult to begin with. one thing they are doing is trying to raise the game, do what they did in the u.s. and make espresso better and really get in touch with being the best espresso-based specialty coffee retailer over there. it seems to be stabilizing things for now. we'll see from here. internationally, the story is really more asia. they are expanding rapidly and finding success. >> price target 64 suggests a lot of easy money has been made.

you going to elevate that or not? >> we wonder if we are being too conservative with the growth ratio in the 1.1 to 1.2 suggested by the 23 times multiple target. right now this is a company that could do growth. we have to evaluate that as momentum continues. maybe there is upside. >> great to see you david. david palmer at ubs. >> still to come, goldman sachs ceo lloyd blankfine on the fed and his beard. stay tuned. to generate income? with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens and i helped create fidelity's options platform. it's one more innovative reason serious investors

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our andrew ross-sorkin sitting down with lloyd blankfein this morning. when asked about the fed interest rate policy and the impact on the market he had this to say. >> the market has gone up. without -- with people being underinvested there will be a turn. the turn in interest rates into equities won't necessarily happen when the fed changes interest rate policy. it will happen when the market decides the fed will have to change interest policy which can happen a lot soon. >> a lot sooner? >> sooner than the official -- >> mm-hmm.

you may have noticed blankfein is sporting a beard. maybe it's insulation against the cold. maybe it's something more. you had a beard -- >> this isn't a play for bernanke's job or anything else? >> no. >> the beard looks handsome. >> very good. >> simon? >> i think we should all be allowed to have beards. unfortunately, that's not the cable with a ticker way. >> what a week we have had. money in motion currencies. ta deserves an hour by itself. >> facebook earnings action. >> if you're just joining us this is what you missed earlier. >> announcer: welcome to hour

three of "squawk on the street." here's what's happening so far -- >> we obsess about problems, what's going in congress. sentiment is poor in some ways but with housing stabilizing, probably going back up with cash on the side, with the blessings of the energy situation no nobody anticipated but happened. low interest rates, the u.s. environment is good. my ear is tuned for hearing more cuts in spending. i'm not hearing it. i would be disappointed if that's all there was. >> many good things are happening. you can't fight this. things are better. should people come in now? you wish they had come in earlier. microsoft is like your parents' stock. >> sherwin-williams. >> that's a kid stock, i guess. [ bell ringing ]

>> it's the lack of consistency against different jurisdictions. we all run international companies now. if you have different regimes in different markets it's almost impossible to run a business that way. that's what we have to struggle through. that will be a headwind for a while, i'm afraid. >> good friday morning. we are live at post 9 of the new york stock exchange. let's check on the market as we dance around 15 # 00. just below it now on the s&p. check the dow up 30 points. s&p is up eight straight. something we have not done since fall of 2004. starbucks a big gainer reporting first quarter profits thanks to growth in asia. falling after being hit with downgrades the stock taken to underperform. buckingham palace downgrading to

neutral from buy. markets around the five-year highs. can it last? we'll consult the charts and see how you should play the rally. microsoft, a disappointing second quarter as windows 8 fails to thrill consumers and investorses. find out how the company can stay relevant amid fierce competition. a top enforcer at the s.e.c., did one of the top cops do enough to regulate wall street and protect investors? we'll go inside. imagine doing your online shopping without a credit card or bank account. voku is making it happen. they will tell us how they are revolutionizing the world of mobile payments. the dow and s&p hitting highs not seen since 2007. the sector hurting after apple's slide yesterday. up more than 30% over the last five yearses. jon fortt is live in san jose with more on tech in the west coast.

hey, jon. >> hey, carl. tech changed in five years. no two stocks tell the story better than apple and hp. five-plus years ago, october 9, 2009 hp was higher than the dot com deductible. it lost more than two-thirds of the t value since then. blame it on the shaky pc market and shift to software and high end services. apple up more than 16 # 5% even given the troubles of late. apple was driving the boat hp missed -- mobility. the iphone had been out just three months. that was a good time to buy the stock. that tells you why it's up just 10%. the p.c. market struggled taking down names like hp, dell and

logitech. the two absolute worst performers in the i.t. sector were nokia and research in motion who were the leaders in smartphones. interesting that we are talking about this right at this moment by the way when people are having doubts about apple which would have been the best performer as of a month ago but is now number three. optimistic about the worst performers. we'll see what happens in the next few months as people see prap what is the future of computing and mobility look like. >> we'll get an indication from r.i.m. on that. i know you will be there for that. see you in a little bit. jon fortt in san jose. look at how retail fared and what could be ahead for that sector as well. courtney reagan is all over that. >> it's a consumer that led the way for the blue chip index since the october 2007 close. two retailers in the top five.

home depot was the worst performer. it was the best up 106%. was that fore shadowing the housing crisis? perhaps. it is the best dow performer in the last ten months. the world's largest retailer takes the fourth best spot. walmart shares increased 50%. so far home depot and walmart are two of the ten dow components up double digits. when it comes to the bempbl mark s&p 500 two of the three top components are consumer discretionary companies with ross stores, the retailer up the most in the bunch up 376%. 18 of 42 components have doubled in that time period. those are consumer discretionary names including tjx, dhar tree, ralph lauren, fossil, amazon and limited brands. jc penney shares have shed nearly 72% of their value. best buy down nearly 69%. while the first month isn't over

yet, best buy is up 31%. quite a reversal. the jcp turn around isn't catching bullish moves soer if a. the past five years haven't been easy for the consumer marked with high unemployment, uncertainty. the winners are the low end dollar stores, discounters, off price retailers and the very strong high end brands like ralph lauren. >> what a puzzling sector, especially this week with coach. meantime the dow and s&p around the five-year highs. what are the charts saying about where we go from here? lou green is at dwr trading group and joins us from chicago. lou, welcome back. >> good to talk to you, carl. >> people have questions about resistance. you're argument is we may have blown through it. >> it's interesting. there is a price ban between 1468 and 1474 on the s&p. the way i first nosed was taking a view from 40,000 feet at the

beginning of the year. noticed the all-time high call car year close was 1999 at 1469 and a quarter. the second highest calendar year close was 2007. that was 1468.36. less than a point difference of the two all time highest calendar year closes. of course the years following that the opening price for the year was close to those levels. last year was 1474. that's an interesting band but the yearly chart is no way to trade. ending on wednesday of last week for five days the high of the day and almost the range of the day was within the 1468 to 1474 band. last thursday we rallied above that and haven't looked back since. >> i see nothing the way between here and the all time high.

i have given you lots of numbers. should we go under that it looks like a pivot level. >> it appears we'll look back potentially at january 17th as the day the gates opened. >> on the charts that could be true. >> what gives you confidence that there is room to run, that we'll continue to rally? >> technically there is room to run. you have the fed but sometimes the world and economics can sometimes intrude on the stock market. we have rallilied a long way since the lows in 2009. but the gdp of the country has been as sluggish during any time. now it is close to 1%.

there are differences between economics and the stock market. sometimes economics can intrude. >> i know you didn't bring charts on bonds specifically. because there is discussion about whether or not investors are leaving bonds, lou, is the ten-year showing a real break out. >> i don't think it's showing a breakout. it has been weak over the last few months. you have taken some of the safety out of the trade. i'm not saying where it's going in the interim. i don't think we are done with the low interest rates on the long end. there are factors including a lack of safe collateral, even though investors like an insurance company or pension fund may want to hold their nose while they do things. there aren't that many things considered safe collateral.

i don't think we have seen the low yield on the ten-year. economics can intrude. but, no, i don't think the situation has changed enough. when it ends it probably won't be pretty. i don't think we've there yet. >> yeah. it would be interesting to watch equities continue to run even as we go back and re tetest 1.6 one ten-year. stranger things happened. >> maybe going back below 1478 to 74 would encourage a run in the ten-year. windows 8 not doing great things for microsoft second quarter. how do they stay relevant. it's tim geithner's last day at treasury. find out what's planned for the future and where we may see him

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welcome back. yum brands under pressure after reports that chicken in china contained press conservative levels of chemicals. we have heard it before. this escalating the month-long food scare that hit yum sales.

that's the biggest market in china. we are waiting for their response. as you can see yum brand shares down 3.5%. carl? >> thank you. microsoft earnings may have been slightly above forecasts but the numbers showing the windows eight operating system getting off to an unspectacular start. what must they do to avoid going the way of the p.c.? paul sloan is executive editor at c-net. good morning, guys. >> good morning. >> paul, what do you think the quarter said about the long term relevance here? >> you know, b it's a huge challenge. what it said is we still don't know how well windows eight will work with new products. we don't know about surface sales. it's not great yet. they had small distribution. they're branching out, working with partners. windows phones still small market share. it's a big challenge. it says there are too many unknowns. all the optimism in the fall about the launch, look at it

now. it's a huge question mark. >> it's a big ship to turn, isn't it? a lot of people wonder if we are doomed to be below $30 a share for a long time as we have been. >> we know that consumers aren't terribly excited about this. remember, this is all a consumer play. the reason microsoft has gone into tablets and touch screens is that consumerzation of i.t. means the way they get these devices into the hands is if they are excited about them. pick this up rather than an ipad is the message. what we know from the first two, three months is consumers said, no, nothing much i have seen yet makes me want one. the surface sales. the fact that microsoft didn't say how many surface tablets they sold in the first couple of months is a telling sign. all the signs in the stores are that people don't want them.

early push, not great. second push, we are now going to see this spring with an enterprise business push on the surface and more devices. they have to make this work now in the next couple of months. >> richard raises a great point. before the initial launch people said you have to wait for stage two of this thing when it kicks into the enterprise. still a legitimate hope for those who were long? >> yeah. certainly they have a market in the enterprise that's huge. it's a solid business on other parts of the division. as richard pointed out they need consumer adojs. the consumer and enterprise market merged people want iphones,en android phones at work. apple problems aren't great products.google is there defini future for us well into mobile. sam sung is doing incredibly

well. there is not a lot of evidence that people will choose products. in fact, there is evidence to the contrary. like richard said, we have to wait for the next chapter. >> they have made changes in the corner office but not to the top. >> steve balmer has been at the top for years now. particularly an industry changing as fast as this. the question isn't so much the product itself. he's not the product genius or visionary. can he build the bright team of people around him? has he built the right team? is he prop vieding the leadership? the one thing i will say is we can't write it off a. too many people are writing off windows 8. you asked about the share price.

there is a lot under pinning the stock. it has amazing cash flow. it's hard now to sell microsoft short. it's on the floor. if ballmer can't show the market moving and that his team is the right team to get the company moving, late this year i think there will be questions about his position. >> paul, whether it's the cash flow or the sheer level of cash they have on the sideline, it seems we have had this conversation forever. what do they do about it? are you seeing signs that the story will turn in 2013? >> it's unknown. look, it's early. from where i stand, yes, the company is incredibly strong in many ways. they have said their big bet is on getting the consumer and taking on am and google. not so specifically. obviously through phones and the tablet market.

that's a huge road ahead. you know, they talked yesterday about they had a hundred thousand downloads in the app store. what does apple have? 35 billion or something. it's such a slog. it's hard to imagine. what that means for the company overall, it's too early. i'm not here to speculate about ballmer, just looking through the products. >> you're here to speculate, whether you like it or not. paul, richard, have a great weekend. thanks so much. meantime one of the s.e.c.'s top cops is leaving the agency and could be back on wall street where he started. find out how he responds to criticism that regulators are too soft on the street. later cutting bank accounts and wallets out of online shopping. >> announcer: squawk on the verge. bringing you companies that can transform an industry. >> technology, social media is driving people together and gathering in groups. >> etsy is much more than a

website. it's a new economy. we saw massive opportunity. >> we are on a case around 150 million dollars in our oh second full year. >> it's a winner take all game. >> announcer: innovative ideas. changing the tech world and beyond right here on "squawk on the street." indistinct shouting] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ it's lots of things. all waking up. connecting to the global phenomenon we call the internet of everything. ♪ it's going to be amazing. and exciting.

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this weekend our special series crime and punishment we're going inside the s.e.c. the industry has under gone an extreme make over and some say the broader financial crisis. at the heart of the transformation robert kuzami who will step down next month after four years. scott cohen sat down for an amazing interesting interview. >> amazing how the s.e.c. has opened up. they are more confident. robert khuzami worked for mary jo white at one time and like her she he's seen wall street from all sides.

he was a federal prosecutor and just before heading to the s.e.c. he was a general counsel on wall street at deutsch bank. has he been tough enough on his former colleagues? khuzami says yes. >> there was misconduct. we're going after it. but there are pages of risk disclosure. lawyers reviewed this material. in many case it is risks that later came to pass were disclosed. >> you used to be a wall street lawyer. are they that smart, that good? >> if you buy an investment product and you're warned of a risk that something may happen and that comes to pass, the law says the person who sold it to you hasn't violated the law. >> that's not to say khuzami and company haven't been tough on wall street. the s.e.c. said since he took the job in 2009 more than 150 people have been charged and 2.6 billion dollars recovered include ago a record $550 million settlement with goldman

sachs in a case all about disclosure in the financial crisis. >> as someone who's sat on both sideses of the table as general counsel on wall street and the director of enforcement here, is there truth to what people perceive that banks look at fines as a cost of doing business? >> in this case, no. this involves time and a expense in the investigation. shareholders demanding activity and may sue you. every justice department case is significant. >> a lot of people feel -- individual investors feel the game is rigged now. do they have a point. >> whether it's rigged that it's fraudulent, that's one question. if not, there needs to be greater transparency in order to give the public the faith that this is a level playing field and get them back on the market.

>> that issue is one area he sees as unfinished business. another is hedge funds, particularly insider trading. it's not over. that has been a huge focus already. khuzami says there is a lot to do. civil and criminal authorities say this is not over. see more on investigationsinc cnbc.com. >> how do you think this will dove tail with what white may do? >> there is a message of a new tough cop. white is a former prosecutor and has been a defense attorney for ten years. what people say is she's going to be fair and tough. the issue is trying to get people back in the market. as you heard us talk about a there is a feeling that markets are rigged. that doesn't do well for anybody.

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the european markets are closing now. >> with it a lot of data whether it's gdp in the uk or business sentiment in germany. simon will run it all down. >> flowing across the markets you have this optimism about

equities and about where we are going with the world in 2013. can we go back to the map? i want to show you how germany is outperforming today. this is important. it's risen three, four times as much today as the other european markets. check the figures. it's got big stocks, the diversified chemicals that are all lifting it higher. we talk a lot about the outperformance of the german market. as the dow looks to come back to the record close that we had in october of 2007 -- we're not there yet, but we are getting there. look how similar the german market, the top 30 blue chips are to the dow. almost exactly the same. the german and american stock market, very, very similar. if you look more broadly and compare the german market to the other top 50 blue chips around europe, a big underperformance from the rest of them. you see down almost 30%. they haven't recovered around the rest of the euro zone in the same way plartly because at the beginning of the crisis, 20% of

the market cap was banks. you know what's happened there. a very important day in europe. we are now seeing for the first time the ecb announced that the banks will be able to return some of the money they took. they took a trillion euros of it. today we learned next week the richer banks will return 137 million. today mario draghi was speaking. he said what the ecb has been able to do is have a pos contagi contagion. >> the level of economic activity is in the process of

stabilizing at very low levels. we foresee a recovery in the second part of the year. it is a situation where you have what i called once a positive contagion on the financial markets. and for the financial variables. but we don't see this being transmitted into the real economy yet. >> there is one problem with the money that's being returned to the ecb. that's a danger that you create the perception of a two-tier banking sector in europe. those that will return cheap money to the banks and those that are weaker on the subject of weaker banks that we just mentioned. bmps, the third largest bank in italy. look for it to be bailed out over the weekend after that $1 is billion in trading losses they discovered from derivatives. you mentioned the uk. we should just note the uk contracted in the fourth quarter

more than we thought. britain may have a triple digit recession -- no. a triple recession. >> this is like charades. sounds like -- >> going into recession three times. >> oh. >> they have done the q.e. they got a floating currency but they had to go through austerity which the united states has not. i'm sorry to put you on the spot to help me. >> always hard to keep up with you. see you monday, simon. mary thompson is at the big board. what's moving? >> the markets keep moving higher. the dow and s&p on track for a fourth straight weekly gain. the s&p on track for the best winning streak if it closes with a gain today since 2004. that would be eight straight. one area that isn't participating is the home builders. we had new home sales for december. they were weaker than expected. i stand corrected. they have moved higher recently.

the november numbers were revised and the full year sales were the best. they continue to climb. sectors being led by consumers. there was a five-year high yesterday. those continue to gain consumer staples. among the consumer starts contributing to the gain today, starbucks of course reported good earnings. tiffany had an upgrade at hsbc and auto zone. we are seeing weakness with hasbro saying it will be cutting 10% of its workforce. other winners include a number of companies reporting better than expected earnings. qlogic, tencor and halliburton. and bright horizontal was priced at 22. climbed to 27. so a very good debut for the

child care company. carl, back to you. >> thank you so much. two mattress companies with reports with different results. herb greenburg with with another sector that fascinates you. right? >> it always does. when i see two companies in the same industry getting different treatment on wall street with one making up an excuse and the other not. both really not doing particularly well and the one that appears to be doing better than the other getting smacked when the other isn't, something isn't quite right. there's the story of tempur-pedic and select comfort. tpx talked about a challenging first quarter, but it really didn't lay blame on anything more than product mix and weakness in europe. yet the stock up now about 12%. 11%. it was up 17% last night after the close on this. now select comfort is down around 17%. it missed on both the top and

bottom lines. but it's the reason for the revenue miss that caught my attention. according to the company, the quote, voice of the customer, suggested the fiscal cliff was to blame. if it was the fiscal cliff both companies would have seen it. as for the difference in stock performance, tpx beat, select comfort didn't. both have big short interests. the one that was less bad gets the short squeeze. that's what the market is all about. carl, back to you. >> interesting. somebody's hearing voices, herb. thanks. markets approaching all-time highs today. art cachon is back from ubs. happy friday. >> happy friday to you. i thought the fiscal cliff would have people tossing and turning

all night and you would have to buy a mattress. >> very nice. you said can the herd turn into a stampede. is that the question of the day? >> maybe the week and finishing out the month. we talked about the rodney dangerfield, stealth rally. slowly but steadily things have moved up. we have seen signs of money being diverted instead of going into bond funds where it had again and again. coming in here. that having been said, none of the rally has turned into an outright stampede. we haven't seen huge volume. we haven't seen the sense of a short squeeze, a big panic. so the question is can they keep creeping up until momentum pushes them over. >> you point out into next week, calendar will heat up. we had a respite this week. >> yes. very big calendar. you have the fomc with one of the t two-day meetings. everybody will harp in on that,

particularly with sieps that was some broader dissension. we got the transcripts from 2007 which did not serve the fed well. it wasn't as carefully informed. at the end of the week we get the now all powerful payroll numbers. and sliced in between we've got housing data and other things. >> yeah. today is tim geithner's last day at treasury. how are we going to think of his tenure ten years from now? >> i would think he was pressed into service and was straightforward about it. i will watch the next several months carefully. mr. geithner has basically said i have had enough. i want to get back to my family, et cetera.

would be somewhat contrary to what he said. >> he said, no, that's not true. >> yeah, but he's an old fed guy. having been secretary of the treasury and head of the fed, that would be like william howard taft having been the president and chief justice of the t supreme court. you would be unique in american history. >> the chairmanship ends next year. >> unless something changes. poor mr. bernanke may want to take time off, too, with his beard turning gray. >> for those starting to check in, they see the cover of usa today and reasons why stocks are positive. should the interest be piqued or should flags be going off instead? >> i think their interest should be piqued. we are at a couple of important places we spoke about with technicians like tom demark and

others saying up at the 1500 level the s&p could be making a top. conversely you have people like mr. tepper who seems very excited. i think we are at a key inflection point here. your interest should be piqued in the sense that you should be watching. you should have a plan to be ready to move if you think things are changing. i don't know that you barrel in yet. >> have a great weekend. see you next week. it's been more than four years since t.a.r.p. was enacted. where are the architects of that bill now? we are opening up the t.a.r.p. yearbook to find out. imagine shopping without a bank account or credit card but buying everything you want. if that sounds far-fetched we'll show you how a company is making it happen when "squawk on the street" returns. ncy. you can spot an amateur from a mile away... while going shoeless and metal-free in seconds. and you...rent from national.

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got the coffee. that was fast. we're outta here. ♪ [ engine revs ] ♪ coming up on half time bill ackman fires back at carl ikon over his herbalife short. and why stocks will surge to new highs and an earth moving debate over caterpillar. >> that's an hour i won't miss. thanks, scott. today is geithner's last day on the job. john harwood is live at the white house with a look at his legacy and a preview of what he

could be up to next. talk about a parlor game in washington, john. >> exactly right. look, his legacy is going to be having served with president obama at a time when the financial system was in crisis. they stood it up. we avoided a great depression. now we are in recovery. not a robust recovery. that's something the president has been grappling with. tim geithner has been there at his side as the longest serving member of the economic team. this is the last of geithner's 460 days as treasury secretary. he's the second longest serving. the longest was there for 13 years. geithner spent 17 years total many the treasury department. he was a career civil servant before he was secretary. his signature is on 17 billion pieces of federal reserve currency.

tim geithner is also going to take pride in the fact that 93% of the t t.a.r.p. funds dispersed originally during the financial crisis have been repaid to the treasury. geithner got a fishing rod from colleagues in the treasury department this morning. he said he'll take time. he's ruled out the idea of serving as the next chairman of the federal reserve which people speculated on. this is a moment of transition in his life for the administration. even as it's geithner's last day in treasury, it will be the first day for dennis mcdonough, the new incoming chief of staff replacing jack lou who was replacing tim geithner at treasury. the president will announce it in 20 minutes from now inside the white house. >> we look forward to that. as i said before on the air you made prescient calls all year lo

long. do you think geithner is headed for the fomc or not? >> i don't know the answer to that. i couldn't speculate. >> all right. i love it when you don't know, you say so, john. john harwood in washington. tim geithner certainly not the first of treasury's bailout alums to say good-bye. with many investments turning a profit could the bailout class see a newfound resurgence of power and popularity. kayla looks at where they are now. >> two years ago we would have said it would be impossible. but things changed. we know the most prominent bailout alum is neil cashkari who's announcing he could run for office in california. on neel kashkari.com he looks at his financial savvy. bailout politics got much play during the 2012 campaign. most of the crisis era alums

left washington for the private sector or academia. michelle davis ran public affairs for treasury. she joined the brunswick group and was in familiar territory when the romney campaign looked to her for her expertise on financial sector. steven shafran taught at georgetown, financial engineering in crisis. he had a taste of politics. a council man for catchum, idaho. kendrick wilson was a treasury department adviser and now is at blackrock advising larry fink. moving on, sloan deerin stayed on at treasury until this spring when he worked for compass point. he's now advising potential buyerses of t.a.r.p. stakes. jim millstein, the architect of the aig rescue started his own firm and is currently working on the big airline merger between

american airlines and the u.s. he and philip swegell published an op-ed on fixing fannie mae and freddie mac. perhaps the only alum to land back in government, bob steel, former domestic expert at wachovia, sold to wells fargo. he's now new york city's deputy mayor for economic development. quite a yearbook of people, carl. back to you. >> interesting to watch where those people go in the year ahead. thanks, kayla. want to draw your attention to exxon and apple. exxon reclaiming the mantle as the world's most valuable company. .07%. that caps what's obviously been a tough week for apple. you can see the stock now at 443.90. when we come back, the company helping people around the world pay for online shopping without a credit card or bank account. we'll find out how it's done when we come back. [ male announcer ] some day, your life will flash before your eyes.

make it worth watching. introducing the 2013 lexus ls. an entirely new pursuit. we all work remotely so this is a big deal, our first full team gathering! i wanted to call on a few people. ashley, ashley marshall... here. since we're often all on the move, ashley suggested we use fedex office to hold packages for us. great job. [ applause ] thank you. and on a protocol note, i'd like to talk to tim hill about his tendency to use all caps in emails. [ shouting ] oh i'm sorry guys. ah sometimes the caps lock gets stuck on my keyboard. hey do you wanna get a drink later? [ male announcer ] hold packages at any fedex office location.

>> announcer: one company is allowing people to pay for things with the with device they are never without -- mobile phones. boku payments are simple. there is no enrollment or app required. bokuers enter their mobile phone number during check out and respond to a text message to confirm the payment. the charge shows up on their mobile phone bill. boku partnered with 250 mobile

carriers in 68 countries. major kpoens are boku customers including facebook, electronic arts and sony entertainment. boku is hung up on the future of payments through mobile technology. >> interesting model. we are joined by a member of the executive team. john purdo, good morning to you. some of the metrics there are amazing. 250 mobile carriers. 68 countries. obviously there is scale but what separates you from other things we are hearing about in the mobile payment space? it's getting crowded. >> first of all, thanks for having me on. there are impressive numbers. 250 carriers gives us access to $3.5 billion consume ohher around the world. there are a lot of people saying, oh, it's like square, like this, the other. we have the complete package.

we can undertake payments directly using the one thing everybody knows which is the mobile phone number. the ease of transaction, the simplicity with which we can complete transactions and the reach we have through connections. you talked about it in your earlier piece. 3.5 billion consumers can't be wrong. >> isn't there a finite number of people who don't have a credit card or checking account? how much room is there on the runway for people for whom a phone -- a mobile phone is their only method of payment. >> that's the exciting thing about our company just now. there are some people who use our service because it's the only way they have to pay. the majority of people who pay do have alternatives. do you know why they pay with boku? they prefer it. when is the last time you bought something online? you muck about, enter 16 digits, geez, you have to enter the

expiry date, the little cvb number. by then you've lost interest. everybody knows the mobile phone. enter it and people prefer to pay with boku. it's simpler. >> you can envision people paying for gaming. where's the next spot for the business to migrate to? >> i think you're absolutely right. we are really big in the whole social gaming space at the moment. the next spot is moving out of social game to other forms of digital content. we are getting the right price points. you will see announcements of music, into streaming video. into software purchases. all this digital content. news indeed. perhaps one day we'll get our cnbc subscriptions through boku as well which isn't easy to do. you laugh, but i think it's going to happen. >> believe me, i don't doubt it.

thank you for your time. obviously something we'll watch and hope to have you back soon. thanks very much. i do want to draw your attention to apple. we mentioned for a moment this morning, it had lost the man tell of the world's most valuable company to exxon. apple is making a fresh 52-week low. we were looking at lows that weren't that long term. this is a new 52-week low for shares of apple which is well below 45 this morning. "squawk on the street" will be back. [ female announcer ] what if the next big thing, isn't a thing at all?

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